Q:
SML Cost of Equity Estimation. What arc the advantages of using the SML approach to finding the cost...

SML Cost of Equity Estimation. What arc the advantages of using the SML approach to finding the cost of equity capital? What arc the disadvantages? What are the specific pieces of information needed to use this method? Are all of these variables observable, or do they need to be estimated? What are some of the ways in which you could get these estimates"?

of information are needed to use this method ? Are all of these variables observables or do they need to be estimated? What are...

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Since no information has been given on the current market price of the share, it is assumed to be $40 per share. The net proceeds to the company on a per share basis is the subscription...

If you use the stock beta and the security market line to compute the discount rate for a project, what assumptions are you implicitly making?

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Secutiry market line and beta is a traditional finance theory ans assumes all investors are rational and risk averse. Also, since SML is a striaght line beyond the market portfolio,...

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A 16% cost of equity implies a minimum return investors require to stay invested in the firm. Depending on the risk parameters of the firm, investors assign a premium to the firm and come up...